History
On 11 September 2004, the Federal Treasurer, Peter Costello, announces that the Future Fund will be established following the 2004 federal election. The Future Fund Act, 2006 (Cth) received Royal Assent on 23 March 2006 and on 5 May, A$18 billion in seed capital, derived from government surpluses and income from the sale of a third of Telstra in its ongoing privatisation, was deposited into the fund. The Australian Government transferred their remaining 17% stake in Telstra, valued at A$8.9 billion, into the fund on 28 February 2007. This contribution, combined with other transfers, will push the fund to over A$50 billion by the end of the 2006-2007 financial year.
During May 2007, it was revealed that the Chicago-based Northern Trust Corporation had won a competitive tender process to manage the A$51 billion Future Fund. Rick Waddell, President and Chief Operating Officer of Northern Trust indicated that Australian companies did not have the expertise to manage the Future Fund. Northern Trust stood to collect A$30 million in annual fees. Controversies arose when it was realised that the fund will be managed by a foreign bank with no base in Australia. National secretary of the Finance Sector Union Paul Schroder estimated that around 100 jobs will be lost when the US company starts managing the fund from Singapore using staff from India. Northern Trust was linked to the Enron scandal. General Manager of the Future Fund Management Agency, Paul Costello told a Senate estimates committee hearing that "We were not concerned that this represented a risk to us in terms of the arrangements that we were seeking to put in place with Northern Trust".
In the 2008 and 2009 federal budgets, there was a deficit of A$27 and A$57 billion respectively, yet during these years the Australian Government added a further A$41 billion into the Fund. The 2008 federal budget created a A$20 billion Building Australia Fund to invest in roads, rail, ports and broadband; an $11 billion Education Investment Fund, which absorbed a similar $6 billion fund set up by the previous government; and a A$10 billion Health and Hospital Fund. These new funds were established and administration placed in the hands of the Future Fund, on behalf of the government.
In May 2011 the Future Fund was criticized by The Age newspaper for investing A$135.4 million in 15 foreign-owned companies involved in the manufacture of nuclear weapons for the United States, Britain, France and India. Information about the investments was obtained through a freedom of information request by the International Campaign to Abolish Nuclear Weapons.
Read more about this topic: Australian Government Future Fund
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